In an effort to address the supply chain crisis, governments are providing policy support for enhancing domestic production, thus creating a huge demand for labor. However, the labor market remains tight.
This heightened need for labor in various industries has been driving the demand for outsourcing and staffing service providers that offer efficient and low-cost digital platforms and solutions and help improve operational efficiency.
Given the industry’s solid growth prospects, it has earned the top rating in our proprietary rating system. Therefore, it could be wise to invest in fundamentally strong outsourcing stocks Kforce Inc. (KFRC), GEE Group, Inc. (JOB), Resources Connection, Inc. (RGP), RCM Technologies, Inc. (RCMT), and Korn Ferry (KFY), which are rated Strong Buy in our POWR Ratings system.
Kforce Inc. (KFRC)
KFRC provides flexible and permanent professional staffing services and solutions. It specializes in the areas of IT, finance and accounting, human resources, engineering, pharmaceuticals, healthcare, legal, and scientific.
For its fiscal 2022 first quarter ended March 31, 2022, KFRC’s revenue increased 14.8% year-over-year to $416.97 million. The company’s gross profit came in at $22.45 million, indicating a 25.5% rise from the year-ago period. Its income from operations came in at $27.74 million, up 42.6% from the year-ago period.
KFRC’s net income came in at $19.18 million, representing a 44.6% year-over-year improvement. Its adjusted EPS increased 50% year-over-year to $0.93. As of March 31, 2022, the company had $116.63 million in cash and cash equivalents.
The consensus EPS estimate of $4.35 for its fiscal 2022 ending December 31, 2022, represents a 22.9% year-over-year improvement. It surpassed Street EPS estimates in each of the trailing four quarters. Analysts expect the company’s revenue to reach $1.74 billion for the same fiscal year, indicating a 10% rise from the prior-year period.
KFRC’s EPS is expected to grow at a 15% rate per annum over the next five years. The stock has gained 0.9% over the past nine months to close the last trading session at $62.08.
KFRC’s POWR Ratings reflect this promising outlook. The stock has an overall A grade, which equates to Strong Buy in our proprietary rating system.
It has a B grade for Value, Quality, Growth, and Stability. Click here to see the additional ratings for KFRC’s Sentiment and Momentum.
KFRC is ranked #2 of 18 stocks in the A-rated Outsourcing - Staffing Services industry.
GEE Group, Inc. (JOB)
JOB provides permanent and temporary professional and industrial staffing and placement services. It offers placement of IT, accounting, finance, office, engineering, and medical professionals for direct hire and contract staffing services; and temporary staffing services for light industrial clients.
It also provides medical scribes, which offer electronic medical record services for emergency departments, specialty physician practices, and clinics.
JOB’s net revenues for its fiscal 2022 second quarter ended March 31, 2022, increased 14.2% year-over-year to $39.63 million. The company’s gross profit came in at $14.51 million, indicating a 33.1% rise from the year-ago period. Its income from operations came in at $1.18 million for the quarter, representing an 84.8% rise from the prior-year period.
JOB’s adjusted net income came in at $2.24 million, compared to a loss of $1.74 million in the prior-year period. Its EPS came in at $0.01, versus a $0.10 loss per share in the year-ago period. As of March 31, 2022, the company had $14.18 million in cash.
Analysts expect the company’s revenue to hit $166.77 million for its fiscal 2022 ending September 30, 2022, representing a 12% rise from the prior-year period. The stock has gained 19% over the past nine months to close the last trading session at $0.55.
JOB’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth, Sentiment, and Quality. Click here to see the additional ratings for JOB’s Stability and Momentum.
JOB is ranked #4 in the Outsourcing - Staffing Services industry.
Resources Connection, Inc. (RGP)
RGP provides consulting services to business customers in the areas of transactions and regulations internationally. It also provides services comprising finance transformation, digital transformation, supply chain management, cloud migration, and data design and analytics.
On April 12, 2022, RGP announced plans to expand the digital staffing platform HUGO into the Texas and California markets in fiscal 2023. With positive feedback from clients, talent, and RGP team members, this expansion should benefit RGP.
RGP’s revenue for its fiscal 2022 third quarter ended February 26, 2022, increased 30.6% year-over-year to $204.61 million. The company’s gross profit came in at $76.79 million, indicating a 34.6% rise from the prior-year period. Its income from operations came in at $17.50 million, representing a 756.2% rise from the prior-year period.
RGP’s net income came in at $19.42 million for the quarter, up 2714.6% from the year-ago period. Its adjusted EPS rose 364.3% year-over-year to $0.65. As of February 26, 2022, the company had $82.19 million in cash and cash equivalents.
Analysts expect the company’s revenue to hit $827.40 million for its fiscal 2023 ending May 31, 2023, representing a 3.3% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters.
Its EPS is expected to grow at a rate of 8% per annum over the next five years. The stock has gained 28.9% over the past nine months to close the last trading session at $20.67.
RGP’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has a B grade for Value, Sentiment, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see RGP’s Growth, Momentum, and Stability ratings here.
RGP is ranked #3 in the Outsourcing - Staffing Services industry.
RCM Technologies, Inc. (RCMT)
RCMT provides business and technology solutions through its Engineering, Specialty HealthCare, and Life Sciences and Information Technology segments in the United States, Canada, Puerto Rico, and Serbia. It serves aerospace and defense, energy, financial services, health care, life sciences, manufacturing and distribution, technology industries, educational institutions, and the public sector.
RCMT’s revenue for its fiscal 2022 third quarter ended April 2, 2022, increased 84% year-over-year to $81.96 million. The company’s gross profit came in at $23.42 million, representing a 115.9% year-over-year improvement. Its operating income came in at $9.04 million for the quarter, up 557.1% from the year-ago period.
While its net income increased 547.5% year-over-year to $6.52 million, its EPS grew 675% to $0.62. As of April 2, 2022, it had $859,000 in cash and cash equivalents.
Analysts expect the company’s EPS to improve 139.8% year-over-year to $1.99 for fiscal 2022 ending December 31, 2022. It surpassed Street EPS estimates in each of the trailing four quarters.
The consensus revenue estimate of $311.41 million for the same fiscal year represents a 52.7% rise from the prior-year period. Its EPS is expected to grow at a 15% rate per annum over the next five years. The stock has gained 202.8% over the past nine months to close the last trading session at $19.23.
RCMT’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Growth and a B grade for Value and Quality. Click here to see the additional ratings for RCMT’s Stability, Momentum, and Sentiment.
RCMT is ranked #4 in the same industry.
Korn Ferry (KFY)
KFY provides organizational consulting services through its Consulting; Digital; Executive Search; and Recruitment Process Outsourcing (RPO) & Professional Search segments. The company provides executive search services, organizational strategy, leadership, RPO, business project, professional search, and outsourced recruiting solutions.
It serves public and private companies, middle-market and emerging growth companies, and government and non-profit organizations.
KFY’s total revenue for its fiscal 2022 fourth quarter ended April 30, 2022, increased 30.4% year-over-year to $727 million. The company’s operating income came in at $138.75 million, indicating a 60.9% rise from the prior-year period.
KFY’s adjusted net income came in at $94.43 million for the quarter, up 42.7% from the year-ago period. Its adjusted EPS rose 44.6% year-over-year to $1.75. As of April 30, 2022, the company had $978.07 million in cash and cash equivalents.
Analysts expect the company’s revenue to hit $2.78 billion for its fiscal 2023 ending April 30, 2022, representing a 5.8% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. Its EPS is expected to grow at a rate of 15% per annum over the next five years. The stock has lost 22% over the past nine months to close the last trading session at $58.41.
KFY’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has a B grade for Value, Sentiment, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see KFY’s Growth, Momentum, and Stability ratings here.
KFY is ranked #5 in the Outsourcing - Staffing Services industry.
KFRC shares were unchanged in premarket trading Tuesday. Year-to-date, KFRC has declined -16.75%, versus a -19.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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